FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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On January 1, 2018, the Mason Manufacturing Company began construction of a building to be used as its office headquarters. The building was completed on September 30, 2019.
Expenditures on the project were as follows:
| January 1, 2018 | $ | 1,710,000 | |
| March 1, 2018 | 1,320,000 | ||
| June 30, 2018 | 1,520,000 | ||
| October 1, 2018 | 1,320,000 | ||
| January 31, 2019 | 378,000 | ||
| April 30, 2019 | 711,000 | ||
| August 31, 2019 | 1,008,000 | ||
On January 1, 2018, the company obtained a $4,200,000 construction loan with a 16% interest rate. The loan was outstanding all of 2018 and 2019. The company’s other interest-bearing debt included two long-term notes of $4,000,000 and $6,000,000 with interest rates of 12% and 14%, respectively. Both notes were outstanding during all of 2018 and 2019. Interest is paid annually on all debt. The company’s fiscal year-end is December 31.
Required:
1. Calculate the amount of interest that Mason should capitalize in 2018 and 2019 using the specific interest method.
2. What is the total cost of the building?
3. Calculate the amount of interest expense that will appear in the 2018 and 2019 income statements.
I keep getting the wrong answer for total capitalization and expense
also i try doing the cost of the building
Transcribed Image Text:pectively. Both notes were outstanding during all of 2018 and 2019. Interest is paid annually
company's fiscal year-end is December 31.
Required:
1. Calculate the amount of interest that Mason should capitalize in 2018 and 2019 using the specific interest method.
2. What is the total.cost of the building?
3. Calculate the amount of interest expense that will appear in the 2018 and 2019 income statements.
Answer is not complete.
Complete this question by entering your answers in the tabs below.
Req 1 and 3 Req 2
Calculate the amount of interest that Mason should capitalize in 2018 and 2019 using the specific interest method and interest
expense that will appear in the 2018 and 2019 income statements. (Enter your answers in dollars.)
2018
2019
Interest
capitalized
Interest expense s 1,368,000
624,00o 1,086,084
Req 1 and 3
Req 2>
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